UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: March 31, 2015

 

Or

 

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ____________ to ____________

 

Commission file number: 000-31469

 

Medical International Technology, Inc.

(Exact name of registrant as specified in its charter)

 

Colorado   84-1509950

(State or other jurisdiction of

incorporation or organization)

  

(I.R.S. Employer

Identification No.)

 

1872 Beaulac, Ville Saint-Laurent

Montreal, Quebec, Canada H4R 2E7

(Address of principal executive offices)(Zip Code)

 

Registrant’s telephone number, including area code: (514) 339-9355

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer    ☐     Accelerated filer    ☐
       

Non-accelerated filer    ☐

(Do not check is a smaller reporting company)

   Smaller reporting company    ☒

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No ☒

 

The number of shares outstanding of the registrant’s common stock as of February 4, 2016 was 84,304,627.

 

 

 

 

 

 

 

MEDICAL INTERNATIONAL TECHNOLOGY, INC.

 

FORM 10-Q

 

March 31, 2015

 

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION  
     
Item 1. Consolidated Financial Statements (Unaudited) 5
     
  Consolidated Balance Sheets 5
     
  Consolidated Statements of Operations 6
     
  Consolidated Statements of Cash Flows 7
     
  Consolidated Statements of Comprehensive Loss 8
     
  Notes to Unaudited Consolidated Financial Statements 10-13
     
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13-15
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
     
Item 4. Controls and Procedures 16
     
Part II. OTHER INFORMATION 17
     
Item 1. Legal Proceedings 17
     
Item 1A. Risk Factors 17
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 17
     
Item 3. Defaults upon Senior Securities 17
     
Item 4. Mine Safety Disclosures 17
     
Item 5. Other Information 17
     
Item 6. Exhibits 17
     
SIGNATURES 18

 

2

 

 

CAUTIONARY STATEMENT RELATED TO FORWARD LOOKING STATEMENTS

 

This Periodic Report on Form 10Q (this “Report”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act. Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. These forward-looking statements are found at various places throughout this Report and include information concerning possible or assumed future results of our operations; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future operations, future cash needs, business plans and future financial results, and any other statements that are not historical facts.

 

From time to time, forward-looking statements also are included in our other periodic reports on Forms 10-Q and 8-K, in our press releases, in our presentations, on our website and in other materials released to the public.  Any or all of the forward-looking statements included in this Report and in any other reports or public statements made by us are not guarantees of future performance and may turn out to be inaccurate. These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors.  Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

 

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

 

To Our Shareholders

 

The future of our Corporation has always been our key priority and at the core of our considerations from the start of the Corporation. From quarter to quarter we reassess our positioning in our different markets with each of our distributors and agents we have nationally and internationally, thereafter we take the decisions we deemed the most accurate for the Corporation to gradually improve its results and achieve growth within the medium term. The technological advances we have achieved over the past years in our Needle-Free jet injector market segment firmly places us as the most advanced devices on the market combining speed, regulated pressure, dosage/volume adjustability and accuracy to produce the most efficient method of drug delivery.

 

From the start of our business and to facilitate its rapid market penetration MIT is developing strategic alliances with distributors and agents per Country that have established a successful distribution network in each of the niche market where MIT products can be sold. MIT has developed, during the past several years, distribution networks in a few countries. MIT selects its distributors with the goal of building long-term relationships to ensure the success of MIT’s Needle-Free Injectors.

 

In our last year end financials (2014) we explained the benefits and the disadvantages of such a business model working with distributors. “The disadvantages are when the distributor for different reasons being political, economical or personnel could not perform as expected resulting in loss of sales and profits.”

 

We continue to believe that our marketing policy and strategy this year and in the future is to continue the search for distributors in different markets with the following criteria in place to become an MIT distributor:

 

●Financial stability.
●Strong management.
●Strong marketing and sales team.
●Understanding MIT technologies and have a medical team.
●A strong technical support team.

 

We continue to believe the importance of providing adequate support to our distributors as we expand our network in order to increases sales. The Company could not establish an internal marketing representative to provide support for its distributors for financial reasons; the management and the operation director has regularly assisted our network of distributors in their marketing activities by training the distributor’s sales representatives via video-conferences, providing support for after-sales service, making regular visits, be present at certain important national and international exhibitions or presentations to potential buyers. In addition, MIT’s main priority has and always will be its customer satisfaction.

 

3

 

 

MIT’s marketing and sales strategies in the medium and long term are the following:

 

●Conduct more trials with renowned doctors to respond to new needs in the medical community.
●Hire and train qualified marketing representatives with international experiences.
●Searching for new dynamic and experience distributors worldwide.

 

New products for 2015:

 

MIT will introduce in the second and third quarter of 2015 two new products:

 

1.MED-JET MIT H-4 will target all vaccination clinics, hospitals, and many other departments that have needs for single use disposable cartridge biologic injections.
2.MINI-JET for day old chick vaccination in hatcheries.

 

●The first new product MED-JET MIT H-4 will be used in different market for human vaccination and other medications in different countries including Africa, Asia and the Middle East.
●The second new product MINI-JET will be introduced in different market for day old chick’s vaccination in different countries including USA, Canada, Europe, Africa, Asia and the Middle East.

 

These two new products should help the Company increase its sales with our existing distributors and new potential agent and distributors in different countries that are in negotiation for a potential agreement.

 

Publications issued in 2014:

 

●Treatment of Nail Psoriasis with Intralesional Triamcinolone Acetonide Using a Needle-Free Jet Injector:

 

A Prospective Trial by Melissa Nantel-Battista, Vincent Richer, Isabelle Marcil, and AntranikBenohanian

Canadian Dermatology Association | Journal of Cutaneous Medicine and Surgery, Vol 18, No 1 (January/February), 2014: pp 38–42

From the Department of Dermatology.St.Luc Hospital. Centre Hospitalier de l’Universite´ de Montreal (CHUM), Montreal, QC. Address reprint requests to: Melissa Nantel-Battista, MD, FRCPC. Department of Dermatology, St. Luc Hospital, CHUM, 264 Rene-Levesque, Est., Montreal, QC H2X 1P1; e-mail: melissa.nantel-battista@umontreal.ca

DOI 10.2310/7750.2013.13078

 

Publications issued in 2013:

 

●Selection of Safe Parameters for Jet Injection of Botulinum Toxin in Palmar Hyperhidrosis Aesthetic Surgery Journal February 2013 33: 295-297, http://www.sagepublications.com/
●THE ART OF INJECTING RE-INVENTED: THE FUTURE OF DRUG DELIVERY IS HERE NOW, Copyright © 2013 Frederick Furness Publishing Ltd, www.ondrugdelivery.com

 

4

 

 

PART 1 - FINANCIAL INFORMATION

 

Item 1. Financial Information 

 

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

   March 31,
2015		   September 30,
2014		 
Assets        
Current Assets        
Cash and cash equivalents  $44,910   $33,767 
Accounts receivable, net   8,840    1,461 
Inventories   286,435    326,348 
Prepaid expenses   13,497    4,965 
           
Total Current Assets   353,682    366,541 
           
Long Term Investment          
Investment in MIT China Joint Venture   -    - 
           
Property and equipment, net   167,323    212,012 
           
Other Assets          
Patents (net of accumulated amortization of $46,570 and $40,625)   53,042    58,226 
Total assets  $574,047   $636,779 
           
Liabilities and Stockholders' Equity          
Current Liabilities          
           
Bank line  $70,965   $71,376 
Deferred income   3,361    - 
Accounts payable and accrued expenses   86,447    123,931 
Amounts due to related parties   30,000    50,000 
Current portion of  long term debts   44,222    44,222 
    234,995    289,529 
Long-Term Debts   13,133    42,798 
Notes to related parties   -    30,000 
Total Liabilities   248,128    362,327 
           
Stockholders' Equity          
Preferred stock, $.0001 par value; 3,000,000 shares authorized; No issued and outstanding shares.   -    - 
Common stock, $.0001 par value; 100,000,000 shares authorized;  84,304,627 and 83,804,627 issued and outstanding as of March 31, 2015 and September 30, 2014, respectively   8,430    7,979 
           
Additional paid-in capital   12,917,025    12,867,476 
Deficit   (12,225,567)   (12,269,363)
Other comprehensive income (loss)   (373,969)   (331,640)
           
Total Stockholders' Equity   325,919    274,452 
Total Liabilities and Stockholders' Equity  $574,047   $636,779 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

5

 

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   Three-Months Period
Ended March 31,		   Six-Months Period
Ended March 31,		 
   2015
(Unaudited)		   2014
(Unaudited)		   2015
(Unaudited)		   2014
(Unaudited)		 
Sales  $165,306   $121,743   $298,304   $146,844 
Cost of sales   (39,055)   (30,497)   (81,839)   (50,650)
Gross profit   126,251    91,246    216,465    96,194 
                     
Selling, general, and administrative expenses   (68,778)   (74,165)   (167,839)   (172,277)
    (68,778)   (74,165)   (167,839)   (172,277)
                     
Income (Loss) from operations   57,473    17,081    48,626    (76,083)
                     
Interest income/loss   204    625    499    949 
Interest expense   (2,931)   (2,706)   (5,329)   (5,669)
    (2,727)   (2,081)   (4,830)   (4,720)
                     
Net income (loss)  $54,746   $15,000   $43,796   $(80,803)
                     
Net income (loss) per share  $0.001   $0.000   $0.001   $(0.001)
                     
Basic and diluted weighted average shares outstanding   84,299,071    83,804,627    84,049,132    83,804,627 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

6

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Six Months Ended 
   March 31,   March 31, 
   2015   2014 
Cash flows from operating activities:        
Net income (loss)  $43,796   $(80,803)
Adjustments to reconcile net income (loss) to net cash   provided by (used in) operating activities:          
    Depreciation and amortization expense   41,221    43,952 
    Related party payables settle by common stock   -    20,000 
Changes in:          
    Accounts receivable   (7,379)   66,056 
           
    Inventories   39,913    16,752 
    Prepaid expenses   (8,532)   24,514 
    Accounts payable and accrued liabilities   (34,123)   (6,064)
           
         Net cash provided by (used in) operating activities   74,896    84,407 
           
Cash flows from investing activities:          
    Acquisition of patents   (8,721)   (5,641)
    Tooling and machinery   (11,212)   - 
        Net cash used in investing activities   (19,933)   (5,641)
           
Cash flows from financing activities:          
    Bank line   (411)   9,168 
    Bank loans   (29,665)   (32,389)
    Issuance of notes payable   -    - 
        Net cash used in financing activities   (30,076)   (23,221)
           
Effect of exchange rates   (13,744)   (30,489)
           
Increase (decrease) in cash   11,143    25,056 
           
Cash, beginning of period   33,767    1,020 
Cash, end of period  $44,910   $26,076 
Supplemental disclosure of cash flow information:          
    Cash paid for interest  $5,329   $5,669 
    Cash paid for federal income taxes  $-   $- 
Supplemental disclosure of non-cash transactions          
   Common stock issued for debt reductions  $50,000   $- 

 

 The accompanying notes are an integral part of these consolidated financial statements.

 

7

 

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

 

  

Six Months Ended

March 31,

2015

  

Six Months Ended

March 31,

2014

 
Net income (loss)  $43,796   $(80,803)
Other comprehensive income (loss)          
Foreign currency translation adjustment   42,329    74,970 
           
      Net comprehensive income (loss)  $86,125   $(5,833)

  

The accompanying notes are an integral part of these consolidated financial statements

 

8

 

 

Medical International Technology, Inc.

Notes to Consolidated Financial Statements

 

(Unaudited)

 

Note 1 – Basis of Presentation

 

Interim Financial Statements

 

The accompanying unaudited condensed consolidated financial statements of Medical International Technology, Inc. (“MIT” or the “Company”) and its subsidiary (collectively referred to as the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America, pursuant to the rules and regulations of the Securities and Exchange Commission.  All significant intercompany balances and transactions have been eliminated. These financial statements do not include all information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. It is recommended that these interim unaudited condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2014.

 

In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six month periods ended March 31, 2015 are not necessarily indicative of the results which may be expected for any other interim periods or for the year ending September 30, 2015. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

 

Going concern

 

Excluding other income from the distribution rights agreement termination, the Company had incurred net losses aggregating $169,299 during the two years ended September 30, 2014.  In addition, the Company has accumulated losses of $12,225,567 since inception and a stockholder’s equity of $325,919 at March 31, 2015. These factors, amongst others, raise substantial doubt about the Company’s ability to continue as a going concern.

 

There can be no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available from external sources such as debt or equity financings or other potential sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business. Further, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on the Company’s existing stockholders.

 

The accompanying financial statements do not include any adjustments related to the recoverability or classification of asset carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.

  

Note 2 – Inventories

 

Inventories at March 31, 2015 and September 30, 2014 consist of the following: 

 

   March 31,
2015		   September 30,
2014		 
Raw materials  $170,499   $195,838 
Work in process   89,858    106,696 
Finished goods   26,078    23,814 
Total  $286,435   $326,348 

 

9

 

 

Medical International Technology, Inc.

Notes to Consolidated Financial Statements

 

(Unaudited)

 

Note 3 – Property and Equipment

 

The cost of property and equipment is depreciated over the estimated useful lives of the related assets, which range from 5 to 7 years. Depreciation is computed on the straight-line method for financial reporting purposes and on the declining balance method for income tax reporting purposes. Depreciation expense for the six months ended March 31, 2015 and 2014 was $31,260 and $34,433, respectively

 

Note 4 – Intangible Assets

 

As of March 31, 2015 the Company has net patents on certain technologies aggregating $53,042. Amortization expense for the six months ended March 31, 2015 and 2014 were $9,961 and $9,519, respectively. During the six months ended March 31, 2015, the Company capitalized patent costs on its needle-free injector of $8,721.  Following is a detail of patents at March 31, 2015.

 

   Gross
Intangible
Assets		   Accumulated
Amortization		   Net 
Intangible
Assets		   Weighted
Average
Life (Years)
Patents  $99,612   $46,570   $53,042   5
                   

Note 5 –   Joint venture agreement

 

On May 6, 2009, the Company entered into a certain joint venture agreement (the “Joint Venture Agreement”) with Jiangsu Hualan Biotechnology Ltd. (China) (“Jiangsu Hualan”).  Pursuant to the Joint Venture Agreement, the parties thereto established a joint venture company, Jiangsu Hualan MIT Medical Technology (MIT China) Ltd. (“MIT China” or the “Joint Venture”), focusing on research, production and sales of medical equipments, import and export of medical equipments and components products, especially Needle-Free Jet Injector products. The total investment by the Joint Venture shall amount to $2,000,000, and the registered capital shall amount to $1,400,000.  The Company invested cash of $426,678 and transferred the license rights to produce and sell the Company’s needle-free injectors products into the Joint Venture.  The license rights were valued at $280,000 under the agreement.  The contributions by the Company resulted in the Company owning 49% of the registered capital of the Joint Venture.  Jiangsu Hualan contributed cash of $714,000, and owns 51% of the registered capital.

 

Under the Joint Venture Agreement, the Company appointed 1 member, and Jiangsu Hualan appointed 2 members, to the board of directors of the Joint Venture.  Profits of the Joint Venture will be allocated based upon each party’s investment in the registered capital.

 

In March 2012, MIT China agreed and sold 9% of the joint venture for an investment of 18,000,000 RMB (US$3,000,000). Jiangsu Hualan now has 46.41%, the Company has 44.59%, and Taizhou Amazon Investment Center has 9% ownership in the MIT China joint venture.

 

The Company accounts for its investment in MIT China in accordance with Financial Accounting Standards Board Accounting Standards Codification 323, “Investment — Equity Method and Joint Venture” (ASC 323), previously referred to as Accounting Principles Board Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock.” Accordingly, the Company adjusts the carrying amount of its investment in MIT China to recognize its share of earnings or losses. As of March 31, 2015 and September 30, 2014, the Company’s had no recorded investment remaining in the MIT China.

 

During the two quarters ended March 31, 2015 and 2014, the Company had approximately $127,000 and $0, respectively, in sales of products to the joint venture.

 

During the quarter ended March 31, 2015 and 2014, the Company had $61,000 and $0, respectively, in sales of products to the joint venture.

 

10

 

 

Medical International Technology, Inc.

Notes to Consolidated Financial Statements

 

(Unaudited)

 

Note 6 – Bank Line

 

The Company, through a hypothec agreement, has a line of credit up to a maximum of $100,000. The line is secured by Investissement Quebec (a Quebec government entity) and by Karim Menassa (personally) and by account receivables, inventories, equipment and all other assets of the Company. The line bears interest at the prime rate plus 2.5% (5.75% at September 30, 2014). At March 31, 2015 and September 30, 2014, the Company had $70,965 and $71,376 outstanding under the agreement.

 

Note 7 – Related Party Transactions

 

As of March 31 2015 and September 30, 2014, the Company had two unsecured notes due to a related party totaling $30,000 that bear interest at 8% and are due December 15, 2015.

 

As of September 30, 2014, the Company had an unsecured advance from a shareholder of $50,000. This advance bears no interest and was converted to 500,000 common shares as of January 2015.

 

During the six month periods ended March 31, 2015 and 2014, the Company paid approximately $56,300 and $12,900, respectively to a company owned by the President and CEO for consulting fees.

 

During the three month periods ended March 31, 2015 and 2014, the Company paid approximately $8,300 and $0, respectively to a company owned by the President and CEO for consulting fees.

 

Note 8 – Stockholders' Equity

 

Issuance of Common Stock

 

From time to time, the Company will issue common stock for services rendered, debt reductions or as part of private placement offerings. 

 

For the quarter ended March 31, 2015, there were 500,000 shares of common stock issued in exchange for an advance from an investor of $50,000.

 

Preferred Stock

 

As of March 31, 2015, there was no preferred stock outstanding. Dividend features and voting rights are at the discretion of the Board of Directors without the requirement of shareholder approval.

 

Outstanding Options

 

As of March 31, 2015 and 2014, there are no options outstanding to purchase shares of the Company’s common stock.

 

Outstanding Warrants

 

There are no outstanding warrants

 

11

 

 

Medical International Technology, Inc.

Notes to Consolidated Financial Statements

 

(Unaudited)

 

Note 9 – Operating Leases

 

The Company leases its office and warehouse space under an operating lease that expires on December 31, 2014 and was extended to December 31, 2015 that calls for a monthly rent of $4,025. Rent expense for the six month ended March 31, 2015 was approximately $23,250.

 

Future minimum lease commitments pertaining to the lease expire as follow:

 

Year ended     
      
      
Dec 31, 2015  $36,225 
      
   $36,225 

  

Note 10 – Notes Payable

 

Long-term debt consists of the following at March 31, 2015 and September 30, 2014:

 

   March 31,
2015		   September 30,
2014		 
Note payable to a bank, bearing interest at prime plus 3%, secured by equipment, due June 21, 2016.  $37,502   $55,572 
Loan Canada Economic Development, no interest, repayment of the contribution in sixteen (16) Equal and consecutive quarterly installment starting twelve (12) month after the project completion date.   19,853    31,448 
Total long-term debt   57,355    87,020 
Current portion of  long-term debt   (44,222)   (44,222)
           
Long-term debt, net of current portion  $13,133   $42,798 

 

Future scheduled principal payments under note agreements are as follows:

 

Year ended    
     
March 31, 2016  $44,222 
March 31, 2017   13,133 
      
   $57,355 

 

Note 11 – Contingencies

 

Legal Proceedings

 

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

 

12

 

 

 

Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations

 

The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.

 

Business Development

 

Expanding the product line:

 

Medical International Technology Inc. (“MIT or the “Company”) has been expanding financial resources in R&D in the last 5 years. MIT already has 5 products for the human market and 9 products for the animal market. The Company will soon be unveiling two new additions to its human product line and one for its animal line.

 

MIT’s patented technology has received approval in several countries worldwide. The Company expects that the three new products will be no exception.

 

The Company is refocusing its efforts and will target FDA approval for two of its latest product lines: first, the home use injector for diabetics and other treatments requiring daily injections, and second, product targeting physicians in their clinics for vaccination and other biological injection medications. FDA approval for these two products will help the Company’s credibility all over the world.

 

MIT products pipeline is already defined for 2012/2013; the realization of these new products design will be achieved by new finance to MIT and or a partnership with Medical and Pharmaceutical Companies.

 

Diabetes

 

The Company intends to target diabetes market through its newly developed Med-Jet model MIT-P-I within the next 8 to 10 months. MIT intends to first introduce this product in China in order to grow its production capacity to eventually expand into other countries. The Med-Jet MIT-P-I is designed to be safe, precise, accurate, effective, easy to use and friendly to the environment.

 

Dentistry

 

The Company plans to target the potentially lucrative dental Anesthesia market with its Med-Jet model MIT-H-VI within the next 12 to 16 months. MIT intends to introduce this new product in North America first before being introduced into other markets.

 

Poultry Vaccinations

 

MIT’s newly designed Agro-Jet model MIT-XII will help prevent the spread of deadly diseases by providing a needle-free alternative to the vaccination of billions of day-old baby chicks yearly. This high speed vaccinator will be able to inject thousands of birds per hour safely, precisely, accurately, effectively, with ease of use and friendly to the environment.

 

Projected Sales and Market Breakdown

 

The following information will outline market expectations by category and timeframe:

 

Human applications:

 

In the next fiscal year, the Company plans to expand its market for cosmetic dermatology, plastic surgery, and general practitioner for single and mass injections.  It will do so through the use of the Med-Jet models MIT MBX and MIT-H-III.  The Company  also plans to introduce a model MESO-JET a product for the injections on the face for all cosmetic dermatology procedures, as well as the MIT-H-IV-1 and MIT-H-IV-5, the MIT P-I injector for Diabetics, , and the MIT-H-VI Dental injector.

 

Animal applications:

 

In the next fiscal year, the Company plans to expand into the pork, cattle, and poultry markets, using our existing and newly redesigned products for mass animal vaccination. 

 

13

 

 

China Joint Venture

 

The creation of MIT China in June of 2009 has given MIT a unique advantage to expand its production operations and increase its sales and profits in the multi-billion dollar worldwide needle-free injector market. Furthermore, MIT China venture will help MIT supply large production volumes in lesser time, which will attract large medical and pharmaceutical partners.

 

The introduction of our Agro-Jet needle-free injector for animal application is progressing well; our veterinary staff has been successfully job training our distributors in various regions. We expect that these efforts will result in sales growth for the coming fiscal quarters and years.

 

During the third quarter of fiscal year 2011, MIT China purchased 151,000 sq. ft. of land and began construction of their first building in Taizhou (China Medical City). This first building of 40,000 sq. ft. when finalized will be used for the production of injectors for the Chinese market only.

 

The work in progress at MIT China for the construction of its 40,000 sq. ft. building has been completed and certified by the Chinese SFDA. We have purchased some equipment and tools necessary for the start of assembly and production of some of our Agro-Jet and Med-Jet products. The production facility should be able to start supplying some number of injectors and disposables to the Chinese market towards the end of second quarter of 2016.

 

Per the recent discussions and understanding of our general manager, Ethan Sun, with our Joint Venture partner, our plan of sales and expansion into the Chinese market is progressing and MIT China agreed and sold 9% of their joint venture for an investment of 18,000,000 RMB (US$3,000,000). MIT China now has 46.41%, we have 44.59%, and Taizhou Amazon Investment Center has 9% ownership in such venture.

 

Our objective is to ensure that our injectors become an indispensable and environmentally friendly product for doctors, dentists, veterinarians and home users around the world.

 

We will continue providing a safe and effective means to help prevent the spread of deadly diseases to both humans and animals through the use of the Med-Jet® and Agro-Jet® needle-free injection system.

 

Results of Operations

 

Results of Operations for the three months ended March 31, 2015 and 2014

 

For the three-month period ended March 31, 2015 the Company experienced income from operations of $57,473 which was primarily due to Selling, general and administrative expenses of $68,778 and sales of $165,306. Gross profits for the period were $126,251.

 

For the three-month period ended March 31, 2014 the Company experienced income from operations of $17,081 which was primarily due to selling, general and administrative expenses of $74,165 and sales of $121,743. Gross profits for the period were $91,246.

 

The increased income between the comparable quarters was due to increased sales as the Company continues to push its products into the market along with reduced research and development costs. Sales for the three-month period ending March 31, 2015 were $165,306 compared to sales of $121,743 for the same period last year. Gross profits for the period ending March 31, 2015 represented 76% of sales, where gross profits for the same period last year represented 75% of sales.

 

Results of Operations for the six months ended March 31, 2015 and 2014

 

For the six-month period ended March 31, 2015 the Company experienced income from operations of $48,626 which was primarily due to selling, general and administrative expenses of $167,839 and sales of $298,304. Gross profits for the period were $216,465.

 

For the six-month period ended March 31, 2014 the Company experienced a loss from operations of $76,083 which was primarily due to selling, general and administrative expenses of $172,277. Gross profits for the period were $96,194.

 

14

 

 

The reduced net loss between the comparable quarters was due to increased sales as the Company continues to push its products into the market along with reduced research and development costs. Sales for the six-month period ending March 31, 2015 were $298,304 compared to sales of $146,844 for the same period last year. Gross profits for the period ending March 31, 2015 represented 73% of sales, where gross profits for the same period last year represented 66% of sales.

  

Liquidity and Capital Resources

 

For the six-month period ending March 31, 2015, the Company’s cash position, including access to cash through a revolving line of credit, increased to $44,910. Net cash provided by operating activities was $74,896. Cash used by financing activities was $30,076 which was primarily a result of payments of debt..  Cash used by investing activities was $19,933, which was a result of acquisitions of new patent rights and fixed assets. The effect of exchange rates on cash decreased cash balances by $13,744.

 

For the six-month period ending March 31, 2014, the Company’s cash position, including access to cash through a revolving line of credit, decreased to $26,076. Net cash provided by operating activities was $84,407. Cash used by financing activities was $23,221 which was primarily a result of bank loans of $32,389.  Cash used by investing activities was $5,641, which was a result of acquisitions of new patent rights. The effect of exchange rates on cash decreased cash balances by $30,489.

  

Plan of Operations

 

MIT intends to concentrate its activities in the medical and veterinary sectors, in particular, in the field of equipment and instrumentation. The Company's strategy is to build good, reliable and cost effective products, seek and establish strategic alliances with different pharmaceutical companies and manufacturers to ensure good distribution channels for its products.

 

MIT promotes and sells products in over 30 countries including the United States of America. MIT is exerting every effort and using its resources to promote its products and to open markets for its technology. As we continue to market our products, we hope to gain broader acceptance of the needle-free injection technology. MIT is continually researching and developing its products to the market needs.

 

We will continue to seek additional funding to expand operations, develop sales revenue, conduct presentation to medical and pharmaceutical companies, achieve sales to a volume sufficient to sustain operations and yield a good return to our shareholders.

 

Product Development

 

Per our previous fillings for FDA approval for our needle-free injector, the MED-JET is designed specifically for mass human inoculations. The MED-JET is capable of delivering many types of medications such as vaccines, insulin and other types of injectables.

 

Its low-pressure technology offers an advantage to alternative high pressure systems that can cause blowbacks and expose medical workers and patients alike to microscopic traces of blood.

 

According to the International Sharps Injury Prevention Society (http://www.isips.org), it has been estimated that one out of every seven workers is accidentally struck by a contaminated sharp point each and every year. The Center for Disease Control (CDC: http://www.cdc.gov/niosh/2000-108.html#5) estimates that there are 600,000 to 800,000 needle stick injuries per year in the U.S. alone, and many are not reported. More than 20 types of infectious agents have been transmitted through needlesticks, including hepatitis B and C, tuberculosis, syphilis, malaria, herpes, diphtheria, gonorrhea, typhus and Rocky Mountain spotted fever. The MED-JET will eliminate this risk to health care professionals and create a safer workplace. Other advantages include its light weight (0.5 kg) and an excellent medication absorption rate. Additionally, the system has the ability to increase or decrease the volume and pressure of injection. This technology is unique to MIT’s MED-JET MBX Injector. The system is designed to inject up to 600 individuals an hour.

 

The approval process can be expensive and may take an extended period of time. There can be no assurance that this system will receive approval from the FDA or if approved gain broad acceptance by the medical community or individual patients.

 

During the last quarter of 2011 we signed with an outside consultant to help MIT with the FDA approval process and to expedite the approval.  This work is proceeding and few more tests must be done in order to file complete documentations to FDA, we have completed all the tests and we have already filled the application, we should now expect a communication from FDA within the next three month.

 

15

 

 

On December 15, 2005, we received full certification granted under the International Organization for Standardization, as well as the Canadian Medical Device Conformity Assessment System for devices to be licensed by HEALTH CANADA. These certifications allow MIT to currently market the Med-Jet Needle-Free Injector for human use in all countries other than the U.S. The Med-Jet injector has been submitted for FDA approval which, if accepted, will allow MIT to sell the Med-Jet in the United States, making it a truly worldwide system.

 

MIT's Needle-Free Injection System, designed specifically to allow fast, accurate and safe injections, is rapidly moving toward establishing itself as a valuable instrument in the fight against disease in both humans and animals. Spurred on by growing fears of a worldwide epidemic that could match or even exceed the deadly flu pandemic of 1918 which killed millions of people, the MIT team is focusing its efforts to make its Needle-Free Injection System available to the world.

 

MIT will increasingly promote its Agro-Jet needle-free injector. Having the same benefits as Med-Jet, Agro-Jet will become a valuable instrument in the fight against Avian Flu via its ability to mass inoculate animals at over 1000 injections per hour.

 

Off Balance Sheet Arrangements

 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.

 

Item 3.   Quantitative and Qualitative Disclosures about Market Risk

 

Not required for Smaller Reporting Companies.

 

Item 4.   Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. 

  

Changes in Internal Control over Financial Reporting

 

There have been no changes in our internal control over financial reporting that occurred during the quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

  

16

 

 

PART II OTHER INFORMATION

 

Item 1.    Legal Proceedings

 

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

 

Item 1A. Risk Factors

 

Not required for Smaller Reporting Companies.

 

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3.    Defaults upon Senior Securities

 

None.

 

Item 4.    Mine Safety Disclosures

 

Not applicable.

 

Item 5.    Other information

 

None.

 

Item 6.   Exhibits

 

Exhibits    
     
 31.1   Certification of Principal Executive Officer and Principal Financial Officer of the Registrant pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 32.1*  Certification of Principal Executive Officer and Principal Financial Officer of the Registrant pursuant to 18U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 101.INS**  XBRL Instance Document
 101.SCH**  XBRL Taxonomy Schema
 101.CAL**  XBRL Taxonomy Calculation Linkbase
 101.DEF**  XBRL Taxonomy Definition Linkbase
 101.LAB**  XBRL Taxonomy Label Linkbase
 101.PRE**  XBRL Taxonomy Presentation Linkbase

 

*In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.

 

** Furnished herewith. XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

17

 

 

SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Medical International Technology, Inc.
     
Date: February 4th, 2016 By: /s/ Karim Menassa  
    Karim Menassa
    President, Chief Executive Officer, and
Chief Financial Officer
    (Duly Authorized Officer, Principal Executive Officer, and Principal Financial Officer)

 

 

18

 

 



 

EXHIBIT 31.1

 

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

 

I, Karim Menassa, certify that:

 

1.   I have reviewed this Form 10-Q of Medical International Technology, Inc.;

 

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods present in this report;

 

4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;

 

(c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)   Disclosed in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)   Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

  Medical International Technology, Inc.
     
Date: February 4th, 2016 By: /s/ Karim Menassa
    Karim Menassa
    President, Chief Executive Officer, and
Chief Financial Officer
    (Duly Authorized Officer, Principal Executive Officer, and Principal Financial Officer)

 

 



 

EXHIBIT 32.1

 

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

 

In connection with the accompanying quarterly report on Form 10-Q of Medical International Technology, Inc. for the period ending March 31, 2015, I, Karim Menassa, Principal Executive Officer and Principal Financial Officer of Medical International Technology, Inc., hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that:

 

1. Such quarterly report on Form 10-Q for the period ending March 31, 2015, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
2. The information contained in such quarterly report of Form 10-Q for the period ending March 31, 2015, fairly represents in all material respects, the financial condition and results of operations of Medical International Techonology, Inc.

 

  Medical International Technology, Inc.
     
Date: February 4th, 2016 By: /s/ Karim Menassa
    Karim Menassa
    President, Chief Executive Officer, and
Chief Financial Officer
    (Duly Authorized Officer, Principal Executive Officer, and Principal Financial Officer)

 

 

 

 



v3.3.1.900
Document and Entity Information - shares
 6 Months Ended
Mar. 31, 2015
Feb. 04, 2016
Document and Entity Information [Abstract]    
Entity Registrant Name MEDICAL INTERNATIONAL TECHNOLOGY INC  
Entity Central Index Key 0001112372  
Amendment Flag false  
Current Fiscal Year End Date --09-30  
Document Type 10-Q  
Document Period End Date Mar. 31, 2015  
Document Fiscal Year Focus 2015  
Document Fiscal Period Focus Q2  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   84,304,627


v3.3.1.900
Consolidated Balance Sheets
Mar. 31, 2015
USD ($)
Sep. 30, 2014
USD ($)
Current Assets    
Cash and cash equivalents $ 44,910 $ 33,767
Accounts receivable, net 8,840 1,461
Inventories 286,435 326,348
Prepaid expenses 13,497 4,965
Total Current Assets $ 353,682 $ 366,541
Long Term Investment    
Investment in MIT China Joint Venture
Property and equipment, net $ 167,323 $ 212,012
Other Assets    
Patents (net of accumulated amortization of $46,570 and $40,625) 53,042 58,226
Total assets 574,047 636,779
Current Liabilities    
Bank line 70,965 $ 71,376
Deferred income 3,361
Accounts payable and accrued expenses 86,447 $ 123,931
Amounts due to related parties 30,000 50,000
Current portion of long term debts 44,222 44,222
Total Current Liabilities 234,995 289,529
Long-Term Debts $ 13,133 42,798
Notes to related parties 30,000
Total Liabilities $ 248,128 $ 362,327
Stockholders' Equity    
Preferred stock, $.0001 par value; 3,000,000 shares authorized; No issued and outstanding shares.
Common stock, $.0001 par value; 100,000,000 shares authorized; 84,304,627 and 83,804,627 issued and outstanding as of March 31, 2015 and September 30, 2014, respectively $ 8,430 $ 7,979
Additional paid-in capital 12,917,025 12,867,476
Deficit (12,225,567) (12,269,363)
Other comprehensive income (loss) (373,969) (331,640)
Total Stockholders' Equity 325,919 274,452
Total Liabilities and Stockholders' Equity $ 574,047 $ 636,779


v3.3.1.900
Consolidated Balance Sheets (Parenthetical) - USD ($)
Mar. 31, 2015
Sep. 30, 2014
Balance Sheet [Abstract]    
Patents accumulated amortization $ 46,570 $ 40,625
Preferred stock, par value $ 0.0001 $ 0.0001
Preferred stock, shares authorized 3,000,000 3,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value $ 0.0001 $ 0.0001
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 84,304,627 83,804,627
Common stock, shares outstanding 84,304,627 83,804,627


v3.3.1.900
Consolidated Statements of Operations (Unaudited) - USD ($)
 3 Months Ended 6 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Mar. 31, 2015
Mar. 31, 2014
Statements of Operations [Abstract]        
Sales $ 165,306 $ 121,743 $ 298,304 $ 146,844
Cost of sales (39,055) (30,497) (81,839) (50,650)
Gross profit 126,251 91,246 216,465 96,194
Selling, general, and administrative expenses (68,778) (74,165) (167,839) (172,277)
Total operating expenses (68,778) (74,165) (167,839) (172,277)
Income (Loss) from operations 57,473 17,081 48,626 (76,083)
Interest income/loss 204 625 499 949
Interest expense (2,931) (2,706) (5,329) (5,669)
Total other income (expense) (2,727) (2,081) (4,830) (4,720)
Net income (loss) $ 54,746 $ 15,000 $ 43,796 $ (80,803)
Net income (loss) per share $ 0.001 $ 0.000 $ 0.001 $ (0.001)
Basic and diluted weighted average shares outstanding 84,299,071 83,804,627 84,049,132 83,804,627


v3.3.1.900
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
 6 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Cash flows from operating activities:    
Net income (loss) $ 43,796 $ (80,803)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:    
Depreciation and amortization expense $ 41,221 43,952
Related party payables settle by common stock 20,000
Changes in:    
Accounts receivable $ (7,379) 66,056
Inventories 39,913 16,752
Prepaid expenses (8,532) 24,514
Accounts payable and accrued liabilities (34,123) (6,064)
Net cash provided by (used in) operating activities 74,896 84,407
Cash flows from investing activities:    
Acquisition of patents (8,721) $ (5,641)
Tooling and machinery (11,212)
Net cash used in investing activities (19,933) $ (5,641)
Cash flows from financing activities:    
Bank line (411) 9,168
Bank loans $ (29,665) $ (32,389)
Issuance of notes payable
Net cash used in financing activities $ (30,076) $ (23,221)
Effect of exchange rates (13,744) (30,489)
Increase (decrease) in cash 11,143 25,056
Cash, beginning of period 33,767 1,020
Cash, end of period 44,910 26,076
Supplemental disclosure of cash flow information:    
Cash paid for interest $ 5,329 $ 5,669
Cash paid for federal income taxes
Supplemental disclosure of non-cash transactions    
Common stock issued for debt reductions $ 50,000


v3.3.1.900
Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($)
 6 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Statements of Comprehensive Loss [Abstract]    
Net income (loss) $ 43,796 $ (80,803)
Other comprehensive income (loss)    
Foreign currency translation adjustment 42,329 74,970
Net comprehensive income (loss) $ 86,125 $ (5,833)


v3.3.1.900
Basis of Presentation
 6 Months Ended
Mar. 31, 2015
Basis of Presentation [Abstract]  
Basis of Presentation

Note 1 – Basis of Presentation

 

Interim Financial Statements

 

The accompanying unaudited condensed consolidated financial statements of Medical International Technology, Inc. (“MIT” or the “Company”) and its subsidiary (collectively referred to as the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America, pursuant to the rules and regulations of the Securities and Exchange Commission.  All significant intercompany balances and transactions have been eliminated. These financial statements do not include all information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. It is recommended that these interim unaudited condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2014.

 

In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six month periods ended March 31, 2015 are not necessarily indicative of the results which may be expected for any other interim periods or for the year ending September 30, 2015. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

 

Going concern

 

Excluding other income from the distribution rights agreement termination, the Company had incurred net losses aggregating $169,299 during the two years ended September 30, 2014.  In addition, the Company has accumulated losses of $12,225,567 since inception and a stockholder’s equity of $325,919 at March 31, 2015. These factors, amongst others, raise substantial doubt about the Company’s ability to continue as a going concern.

 

There can be no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available from external sources such as debt or equity financings or other potential sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business. Further, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on the Company’s existing stockholders.

 

The accompanying financial statements do not include any adjustments related to the recoverability or classification of asset carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.


v3.3.1.900
Inventories
 6 Months Ended
Mar. 31, 2015
Inventories [Abstract]  
Inventories

Note 2 – Inventories

 

Inventories at March 31, 2015 and September 30, 2014 consist of the following: 

 

    March 31, 
2015		     September 30, 
2014		  
Raw materials   $ 170,499     $ 195,838  
Work in process     89,858       106,696  
Finished goods     26,078       23,814  
Total   $ 286,435     $ 326,348


v3.3.1.900
Property and Equipment
 6 Months Ended
Mar. 31, 2015
Property and Equipment [Abstract]  
Property and Equipment

Note 3 – Property and Equipment

 

The cost of property and equipment is depreciated over the estimated useful lives of the related assets, which range from 5 to 7 years. Depreciation is computed on the straight-line method for financial reporting purposes and on the declining balance method for income tax reporting purposes. Depreciation expense for the six months ended March 31, 2015 and 2014 was $31,260 and $34,433, respectively


v3.3.1.900
Intangible Assets
 6 Months Ended
Mar. 31, 2015
Intangible Assets [Abstract]  
Intangible Assets

Note 4 – Intangible Assets

 

As of March 31, 2015 the Company has net patents on certain technologies aggregating $53,042. Amortization expense for the six months ended March 31, 2015 and 2014 were $9,961 and $9,519, respectively. During the six months ended March 31, 2015, the Company capitalized patent costs on its needle-free injector of $8,721.  Following is a detail of patents at March 31, 2015.

 

    Gross 
Intangible 
Assets		     Accumulated 
Amortization		     Net  
Intangible 
Assets		     Weighted 
Average 
Life (Years)
Patents   $ 99,612     $ 46,570     $ 53,042     5


v3.3.1.900
Joint Venture Agreement
 6 Months Ended
Mar. 31, 2015
Joint Venture Agreement [Abstract]  
Joint venture agreement

Note 5 –   Joint venture agreement

 

On May 6, 2009, the Company entered into a certain joint venture agreement (the “Joint Venture Agreement”) with Jiangsu Hualan Biotechnology Ltd. (China) (“Jiangsu Hualan”).  Pursuant to the Joint Venture Agreement, the parties thereto established a joint venture company, Jiangsu Hualan MIT Medical Technology (MIT China) Ltd. (“MIT China” or the “Joint Venture”), focusing on research, production and sales of medical equipments, import and export of medical equipments and components products, especially Needle-Free Jet Injector products. The total investment by the Joint Venture shall amount to $2,000,000, and the registered capital shall amount to $1,400,000.  The Company invested cash of $426,678 and transferred the license rights to produce and sell the Company’s needle-free injectors products into the Joint Venture.  The license rights were valued at $280,000 under the agreement.  The contributions by the Company resulted in the Company owning 49% of the registered capital of the Joint Venture.  Jiangsu Hualan contributed cash of $714,000, and owns 51% of the registered capital.

 

Under the Joint Venture Agreement, the Company appointed 1 member, and Jiangsu Hualan appointed 2 members, to the board of directors of the Joint Venture.  Profits of the Joint Venture will be allocated based upon each party’s investment in the registered capital.

 

In March 2012, MIT China agreed and sold 9% of the joint venture for an investment of 18,000,000 RMB (US$3,000,000). Jiangsu Hualan now has 46.41%, the Company has 44.59%, and Taizhou Amazon Investment Center has 9% ownership in the MIT China joint venture.

 

The Company accounts for its investment in MIT China in accordance with Financial Accounting Standards Board Accounting Standards Codification 323, “Investment — Equity Method and Joint Venture” (ASC 323), previously referred to as Accounting Principles Board Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock.” Accordingly, the Company adjusts the carrying amount of its investment in MIT China to recognize its share of earnings or losses. As of March 31, 2015 and September 30, 2014, the Company’s had no recorded investment remaining in the MIT China.

 

During the two quarters ended March 31, 2015 and 2014, the Company had approximately $127,000 and $0, respectively, in sales of products to the joint venture.

 

During the quarter ended March 31, 2015 and 2014, the Company had $61,000 and $0, respectively, in sales of products to the joint venture.


v3.3.1.900
Bank Line
 6 Months Ended
Mar. 31, 2015
Bank Line [Abstract]  
Bank Line

Note 6 – Bank Line

 

The Company, through a hypothec agreement, has a line of credit up to a maximum of $100,000. The line is secured by Investissement Quebec (a Quebec government entity) and by Karim Menassa (personally) and by account receivables, inventories, equipment and all other assets of the Company. The line bears interest at the prime rate plus 2.5% (5.75% at September 30, 2014). At March 31, 2015 and September 30, 2014, the Company had $70,965 and $71,376 outstanding under the agreement.


v3.3.1.900
Related Party Transactions
 6 Months Ended
Mar. 31, 2015
Related Party Transactions [Abstract]  
Related Party Transactions

Note 7 – Related Party Transactions

 

As of March 31 2015 and September 30, 2014, the Company had two unsecured notes due to a related party totaling $30,000 that bear interest at 8% and are due December 15, 2015.

 

As of September 30, 2014, the Company had an unsecured advance from a shareholder of $50,000. This advance bears no interest and was converted to 500,000 common shares as of January 2015.

 

During the six month periods ended March 31, 2015 and 2014, the Company paid approximately $56,300 and $12,900, respectively to a company owned by the President and CEO for consulting fees.

 

During the three month periods ended March 31, 2015 and 2014, the Company paid approximately $8,300 and $0, respectively to a company owned by the President and CEO for consulting fees.


v3.3.1.900
Stockholders' Equity
 6 Months Ended
Mar. 31, 2015
Stockholders' Equity [Abstract]  
Stockholders' Equity

Note 8 – Stockholders' Equity

 

Issuance of Common Stock

 

From time to time, the Company will issue common stock for services rendered, debt reductions or as part of private placement offerings. 

 

For the quarter ended March 31, 2015, there were 500,000 shares of common stock issued in exchange for an advance from an investor of $50,000.

 

Preferred Stock

 

As of March 31, 2015, there was no preferred stock outstanding. Dividend features and voting rights are at the discretion of the Board of Directors without the requirement of shareholder approval.

 

Outstanding Options

 

As of March 31, 2015 and 2014, there are no options outstanding to purchase shares of the Company’s common stock.

 

Outstanding Warrants

 

There are no outstanding warrants


v3.3.1.900
Operating Leases
 6 Months Ended
Mar. 31, 2015
Operating Leases [Abstract]  
Operating Leases

Note 9 – Operating Leases

 

The Company leases its office and warehouse space under an operating lease that expires on December 31, 2014 and was extended to December 31, 2015 that calls for a monthly rent of $4,025. Rent expense for the six month ended March 31, 2015 was approximately $23,250.

 

Future minimum lease commitments pertaining to the lease expire as follow:

 

Year ended        
         
         
Dec 31, 2015   $ 36,225  
         
    $ 36,225  
 


v3.3.1.900
Notes Payable
 6 Months Ended
Mar. 31, 2015
Notes Payable [Abstract]  
Notes Payable

Note 10 – Notes Payable

 

Long-term debt consists of the following at March 31, 2015 and September 30, 2014:

 

    March 31, 
2015		     September 30, 
2014		  
Note payable to a bank, bearing interest at prime plus 3%, secured by equipment, due June 21, 2016.   $ 37,502     $ 55,572  
Loan Canada Economic Development, no interest, repayment of the contribution in sixteen (16) Equal and consecutive quarterly installment starting twelve (12) month after the project completion date.     19,853       31,448  
Total long-term debt     57,355       87,020  
Current portion of  long-term debt     (44,222 )     (44,222 )
                 
Long-term debt, net of current portion   $ 13,133     $ 42,798  

 

Future scheduled principal payments under note agreements are as follows:

 

Year ended      
       
March 31, 2016   $ 44,222  
March 31, 2017     13,133  
         
    $ 57,355


v3.3.1.900
Contingencies
 6 Months Ended
Mar. 31, 2015
Contingencies [Abstract]  
Contingencies

Note 11 – Contingencies

 

Legal Proceedings

 

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.


v3.3.1.900
Inventories (Tables)
 6 Months Ended
Mar. 31, 2015
Inventories [Abstract]  
Components of inventories

 

    March 31, 
2015		     September 30, 
2014		  
Raw materials   $ 170,499     $ 195,838  
Work in process     89,858       106,696  
Finished goods     26,078       23,814  
Total   $ 286,435     $ 326,348


v3.3.1.900
Intangible Assets (Tables)
 6 Months Ended
Mar. 31, 2015
Intangible Assets [Abstract]  
Summary of intangible assets

 

    Gross 
Intangible 
Assets		     Accumulated 
Amortization		     Net  
Intangible 
Assets		     Weighted 
Average 
Life (Years)
Patents   $ 99,612     $ 46,570     $ 53,042     5


v3.3.1.900
Operating Leases (Tables)
 6 Months Ended
Mar. 31, 2015
Operating Leases [Abstract]  
Schedule of future minimum lease commitments
Year ended        
         
         
Dec 31, 2015   $ 36,225  
         
    $ 36,225


v3.3.1.900
Notes Payable (Tables)
 6 Months Ended
Mar. 31, 2015
Notes Payable [Abstract]  
Schedule of long-term debt

 

    March 31, 
2015		     September 30, 
2014		  
Note payable to a bank, bearing interest at prime plus 3%, secured by equipment, due June 21, 2016.   $ 37,502     $ 55,572  
Loan Canada Economic Development, no interest, repayment of the contribution in sixteen (16) Equal and consecutive quarterly installment starting twelve (12) month after the project completion date.     19,853       31,448  
Total long-term debt     57,355       87,020  
Current portion of  long-term debt     (44,222 )     (44,222 )
                 
Long-term debt, net of current portion   $ 13,133     $ 42,798
Future scheduled principal payments of long-term debt
Year ended      
       
March 31, 2016   $ 44,222  
March 31, 2017     13,133  
         
    $ 57,355


v3.3.1.900
Basis of Presentation (Details) - USD ($)
 12 Months Ended
Sep. 30, 2014
Mar. 31, 2015
Basis of Presentation (Textual)    
Aggregate net losses $ 169,299  
Accumulated losses (12,269,363) $ (12,225,567)
Stockholders' equity $ 274,452 $ 325,919


v3.3.1.900
Inventories (Details) - USD ($)
Mar. 31, 2015
Sep. 30, 2014
Components of inventories    
Raw materials $ 170,499 $ 195,838
Work in process 89,858 106,696
Finished goods 26,078 23,814
Total $ 286,435 $ 326,348


v3.3.1.900
Property and Equipment (Details) - USD ($)
 6 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Property and Equipment (Textual)    
Property and equipment, estimated useful lives The cost of property and equipment is depreciated over the estimated useful lives of the related assets, which range from 5 to 7 years.  
Depreciation expense $ 31,260 $ 34,433


v3.3.1.900
Intangible Assets (Details) - USD ($)
 6 Months Ended
Mar. 31, 2015
Sep. 30, 2014
Detail of patents    
Accumulated Amortization $ 46,570 $ 40,625
Net Intangible Assets 53,042 $ 58,226
Patents [Member]    
Detail of patents    
Gross Intangible Assets 99,612  
Accumulated Amortization 46,570  
Net Intangible Assets $ 53,042  
Weighted Average Life (Years) 5 years  


v3.3.1.900
Intangible Assets (Details Textual) - USD ($)
 6 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Sep. 30, 2014
Intangible Assets (Textual)      
Aggregate net patents $ 53,042   $ 58,226
Amortization expenses 9,961 $ 9,519  
Capitalized patent costs on needle-free injector $ 8,721    


v3.3.1.900
Joint Venture Agreement (Details)
 1 Months Ended 3 Months Ended 6 Months Ended
May. 06, 2009
USD ($)
Members
Mar. 31, 2012
USD ($)
Mar. 31, 2015
USD ($)
Mar. 31, 2014
USD ($)
Mar. 31, 2015
USD ($)
Mar. 31, 2014
USD ($)
Sep. 30, 2014
USD ($)
Mar. 31, 2012
CNY (¥)
Joint Venture Agreement (Textual)                
Ownership percentage 49.00% 44.59%           44.59%
Cash invested in joint venture   $ 3,000,000     ¥ 18,000,000
Number of members appointed under joint venture agreement | Members 1              
Total investment to be made by joint venture $ 2,000,000              
Registered capital 1,400,000              
Investment in joint venture 426,678              
Value of license rights $ 280,000              
Sale of joint venture percentage for an investment by parent company   9.00%            
Sale of products to joint venture, amount     $ 61,000 $ 0 $ 127,000 $ 0    
Jiangsu Hualan [Member]                
Joint Venture Agreement (Textual)                
Ownership percentage 51.00% 46.41%           46.41%
Cash invested in joint venture $ 714,000              
Number of members appointed under joint venture agreement | Members 2              
Taizhou Amazon Investment Center [Member]                
Joint Venture Agreement (Textual)                
Ownership percentage   9.00%           9.00%


v3.3.1.900
Bank Line (Details) - USD ($)
 6 Months Ended
Mar. 31, 2015
Sep. 30, 2014
Bank Line (Textual)    
Line of credit maximum amount $ 100,000  
Line of credit amount outstanding $ 70,965 $ 71,376
Line of credit, Interest prime rate 2.50%  
Line of credit bears interest rate   5.75%


v3.3.1.900
Related Party Transactions (Details)
 1 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended
Jan. 31, 2015
shares
Mar. 31, 2015
USD ($)
UnsecuredNotes
Mar. 31, 2014
USD ($)
Mar. 31, 2015
USD ($)
UnsecuredNotes
Mar. 31, 2014
USD ($)
Sep. 30, 2014
USD ($)
UnsecuredNotes
Related Party Transaction [Line Items]            
Number of unsecured notes | UnsecuredNotes   2   2   2
Unsecured notes due to related party   $ 30,000   $ 30,000   $ 30,000
Interest rate percent   8.00%   8.00%   8.00%
Unsecured note due date       Dec. 15, 2015   Dec. 15, 2015
Advance from a shareholder           $ 50,000
Debt conveted into common shares | shares 500,000          
CEO [Member]            
Related Party Transaction [Line Items]            
Consulting fees   $ 8,300 $ 0 $ 56,300 $ 12,900  
President [Member]            
Related Party Transaction [Line Items]            
Consulting fees   $ 8,300 $ 0 $ 56,300 $ 12,900  


v3.3.1.900
Stockholders' Equity (Details)
 3 Months Ended
Mar. 31, 2015
USD ($)
shares
Stockholders' Equity [Abstract]  
Issued of common stock | shares 500,000
Advance from investor | $ $ 50,000


v3.3.1.900
Operating Leases (Details)
Mar. 31, 2015
USD ($)
Future minimum lease commitments  
Dec 31, 2015 $ 36,225
Future minimum lease commitments, Total $ 36,225


v3.3.1.900
Operating Leases (Details Textual)
 6 Months Ended
Mar. 31, 2015
USD ($)
Operating Leases (Textual)  
Expiry date of operating lease Dec. 31, 2015
Monthly rent for office and warehouse space $ 4,025
Rent expense $ 23,250


v3.3.1.900
Notes Payable (Details) - USD ($)
Mar. 31, 2015
Sep. 30, 2014
Schedule of long-term debt    
Note payable to a bank, bearing interest at prime plus 3%, secured by equipment, due June 21, 2016. $ 37,502 $ 55,572
Loan Canada Economic Development, no interest, repayment of the contribution in sixteen (16) Equal and consecutive quarterly installment starting twelve (12) month after the project completion date. 19,853 31,448
Long-term Debt 57,355 87,020
Current portion of long-term debt (44,222) (44,222)
Long-term debt, net of current portion $ 13,133 $ 42,798


v3.3.1.900
Notes Payable (Details 1) - USD ($)
Mar. 31, 2015
Sep. 30, 2014
Future scheduled principal payments of long-term debt    
March 31, 2016 $ 44,222  
March 31, 2017 13,133  
Long-term Debt $ 57,355 $ 87,020


v3.3.1.900
Notes Payable (Details Textual)
 6 Months Ended
Mar. 31, 2015
Members
Notes payable to bank [Member]  
Notes Payable (Textual)  
Interest rate in addition to prime rate 3.00%
Debt maturity date Jun. 21, 2016
Canada economic development [Member]  
Notes Payable (Textual)  
Number of consecutive installments for repayment of long-term debt 16
Due date of first installment Sixteen (16) Equal and consecutive quarterly installment starting twelve (12) month after the project completion date.
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